Thursday, October 12, 2006

Yahoo! - When the Bank Says No

Yahoo! Finance has a business learning center and I found an article about what to do "When the Bank Says No".

One of the questions this article poses is - was your written business loan proposal realistic? If I had a nickel for each time a borrower called me with unrealistic expectations, I would be a wealthy man. But I digress...

More to the point, I find that few borrowers have a written business loan proposal. A written business loan proposal can provide key advantages to the borrower and can be accomplished in as little as two pages. Here's what I include in the business loan proposals I prepare for clients.

Executive summary - A short paragraph to make it easy for the lender to decide if they want to read any further

Company overview - What is your business? Who do you serve? What competitive advantages do you have?

Financing requirements - How much money do you need?

Uses of funds - On what will you spend the money from the loan?

Financial history & ratio analysis - How well (or poorly) have you performed in the last 24 to 36 months and why?

Financial projections - What does the future look like once you get this loan?

Collateral review - What sources of repayment are your offering? Banks typically look for cash flow, business assets, assets outside the business and in many cases, personal guarantees of the owners.

Ownership - Who owns the company and how is it legally structured?

Management/advisory board - Who helps you run the company?

Key issues - What challenges are you currently facing and how do you plan to overcome these challenges?

If you can completely and succinctly prepare a written business loan proposal, there's a greater likelihood your expectations will be realistic and a greater chance your bank will say "yes".

If the bank still says "no" to your request for a business loan, you may just be knocking on the wrong door. Don't hesitate to give me a call if you feel like you're knocking on the wrong door or still need help telling your story the right way. There are a lot of options even when the bank does say "no"!

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About Me

Marshall Lebovits has over 25 years of experience in the secured financing industry. Marshall advises on a wide variety of asset based funding solutions for businesses throughout the USA. If your business has receivables, inventory or equipment and needs over $50 thousand of financing, please contact me at 310-344-2522.